Let’s get the irrelevancies out of the way. First, the class was “Introduction to Congress.” Pause for yucks.

Secondly, there are the occasional whiners: “it was really hard, not fair,” or “they didn’t tell us how to define things.” Let’s not pause here either.

Moving right along, now, let’s assume that Harvard is no better or worse than other schools. You may agree or not, but I think the interesting issues lie elsewhere.

David Gebler, ethicist and author of the recent The Three Power Values, says: “It’s the worst hypocrisy to create a set of social norms and expectations in our society of which Harvard is the pinnacle, and then act as shocked as Inspector Renault in Casablanca that the students are acting unethically.”

He’s right. There are three interesting student reactions that seem to crop up in articles about the scandal:

You mean, that was “cheating?”

Come on, everybody does that.

What do you expect me to do, the point is to win.

All three are serious causes for concern, but for very different reasons.

You Mean, That was Cheating?

This isn’t as dumb as many may think on first hearing.

The class in question was conducted making heavy use of teaching aides and study groups. This makes great sense given the need for collaborative workforces in the future. Unfortunately, if learning is primarily group learning, it puts pressure on the academic program and faculty to be very clear about boundaries between individual and group accountability. (There’s a parallel here between group and individual bonus bases within corporations).

That raises many challenges, chief among them that the exam was “open internet.” In a day and age when everyone can share everything with everyone else in real-time, this goes beyond being just a barn-door of a loophole; it’s a fundamental failure to articulate the distinction between individual and group accountabilities.

This doesn’t mean students didn’t behave unethically; but it puts if anything more of a burden on institutions, particularly on schools, to delineate the boundaries.

Come On, Everybody Does That

To the extent this is true – and it’s considerable – shame on the role models.

“professors [who] cut corners — in their class attendance, their attention to student work and, most flagrantly, their use of others to do research.

Most embarrassingly, when professors are caught — whether in financial misdealings or even plagiarizing others’ work — there are frequently no clear punishments. If punishments ensue, they are kept quiet, and no one learns the lessons that need to be learned.”

Gardner cites frequent, broad-based, research over time that suggests students over the last 20 years have become blasé about violations. The majority think firing faculty for falsification of resumes is an over-reaction, and they don’t see much wrong with the behavior of the Enron gang in manipulating prices. After all, “everyone does it.”

I needn’t mention the coverups of the Catholic church, the repression of the ruling class at Penn State, or the general defense of cyclist Lance Armstrong, just to pick a few recent examples. And for heaven’s sake let’s not talk the fate of truth at political party conventions. Sadly, everyone really, really does do that.

“Everybody does that” is no excuse, widespread though it is. Cheating is unethical and should be condemned. But those doing the condemning are frequently those who, like Renault, are by default encouraging the behavior by their failure to act.

What Do You Expect – the Point is to Win

This is the most shocking of the attitudes. While the other two reflect some ambiguity in execution, this argument attacks ethics directly, claiming that ethics should be subordinated to the pursuit of success. A classic ends justify the means argument, which is in principle anti-ethical.

Rich Sternhell, retired executive, says he was not surprised by Gardner’s piece.

“By the time people get to Harvard (or Yale or Penn State or wherever) they have had to compete in ways that never tempted my generation. I note David Brooks’ observation of the recent GOP Convention, how all the speakers with the notable exception of Condoleeza Rice talked about “I” rather than “we”.

Every individual example of ethical violation weakens our community bond. Baseball players worry about their contracts not the team. CEOs worry about their parachutes or share value, not the legacy of the company. The concept of stewardship is rarely heard.”

I would throw in for equal blame our leading business thinkers. We have become subconsciously infected by the doctrines of competitive advantage, shareholder value, and an Ayn-Rand-lensed perversion of Adam Smith’s invisible hand, so much that we have a generation that can’t tell ethics from economics. We actually have game theorists in the Harvard Business Review arguing that throwing a match in the Olympics is in principle no different from a lob shot in tennis – since after all, the ultimate goal is to win.

The economics of crime prevention starts with a depressing assumption: executives simply weigh up all their options, including the illegal ones. Given a risk-free opportunity to mis-sell a product, or form a cartel, they will grab it. Most businesspeople are not this calculating, of course, but the assumption of harsh rationality is a useful way to work out how to deter rule-breakers.

In the US, anti-trust penalties run up to 40%; in the UK, they’re more like 10%. In either country, the article notes, crime pays. In fact, the ROI is downright incentivizing. So it’s no surprise, the article suggests, that crime seems to be undeterred.

Prosecute the Bastards!

You might think, well then, raise the penalties – massively. Here’s the Economist’s logic on why that is, tut-tut, really not such a good idea at all, don’t you know:

There are plenty of arguments against ultra-high fines. One is that false convictions carry too high a cost. Another is that fines of this sort could cripple firms, reducing competition.

Really.

Argument the first. The cost of a false conviction in a personal capital case is, let me see – oh yes, personal death. The cost of a false conviction in a corporate cartel case is – the falsely accused corporate entity pays money. Why do I feel the “too high a cost” argument doesn’t cut it here?

Ethics Without the Ethical Part

Here’s the thing. The entire article is about ethical issues, yet never once mentions ethics. It’s one thing to include a caveat like, “Here we’ll discuss a purely utilitarian view of ethical behavior.” Fine. But to never even mention the existence of another approach to ethics is fodder for paranoid amateur ethicists like me.

Do you think maybe, just maybe, one of the reasons white collar crime is so much on the rise is that no one – most especially not the Fourth Estate – chooses to describe unethical behavior as being – unethical?!

Some of it, I suspect, is style. In too many self-congratulatory business and academic circles it is just uncool to use that word. It’s hip to be a deconstructionist, neuro-whateverist, or a student of behavioral incentives – and maybe to study ethics in kind of an anthropological way. But certainly not to believe in the stuff!

Sorry: if we conduct business solely as an exercise in self-aggrandizing profit maximization, then we will get self-aggrandizing profit-maximizing behavior. If we teach business ethics as a series of cases analyzing the balance of power between “stakeholders,” we will get what we teach.

What would it look like if we actually called ethical violations by their proper name? We would have business, social end educational leaders insisting on massive sanctions, and not because of their deterrent power – but because of their symbolism.

Where is the language of outrage? To fix LIBOR rates, to rip off customers, to lie to the public – these things should be called by their proper names. Those names would be right and wrong, unethical, immoral, outrageous, anti-societal, sociopathic. Mostly just “wrong.”

The ultimate proper penalty is not more of the same lousy financial currency. It is another currency – the currency of social respect. We need to see condemnations, demands for apology – we need public shaming.

While many are blaming the players, the real fault lies with the organizers for designing a tournament that encouraged throwing matches. The solution — apart from banning those pesky Danes and other “upsets” — lies in better design. [Italics mine].

They point out – quite rightly – that the design of the tournament (single elimination after pool play) provides perverse incentives to throw a match – assuming that your objective is to maximize your chances to win an Olympic medal. Interesting, to be sure. And their suggestions make sense; after all, why suborn unethical behavior unnecessarily?

We might even agree with the authors’ conclusion: “If you don’t consider incentives and strategic behavior, there will come a day when strategy trumps ethos. We would do much better to design organizations from the outset with Denmark in mind.”

Here’s the problem. In describing the situation, the authors suggest that throwing a game in order to win the tournament is in principle no different from a lob shot in tennis, or going out slow in the 5000m run – a short term tactic in support of a long-term goal. Can you say, “the end justifies the means?”

I leave it to you, the readers. Can you spot the difference between a tennis lob shot and throwing an Olympic match? If so, congratulations – your ethical instincts are more intact than those whose profession is “competition economics.”

Bonus point: can you tell the difference between throwing a match at the Olympics and throwing the World Series? Me neither. Except that one is being “explained” in the Harvard Business Review as a case of misaligned incentives, and the other – quite properly – is considered the gold standard for sports scandals.

Would somebody please tell the economics profession that they’re missing a few letters in “ethics?” Particularly, the letters e, t, h, i, c and s.

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